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December sees sales slowdown

Retail sales in December saw slow growth compared with the previous year, according to the latest figures.

The BRC-KPMG Retail Sales Monitor for December 2017 showed that retail sales were up 1.4 per cent on a total basis – down on the 1.7 per cent growth seen in December 2016.

On a like-for-like basis, sales grew by 0.6 per cent, compared with the one per cent increase a year earlier.

In the three months to December, in-store sales of non-food items fell by 3.7 per cent on a total basis and 4.4 per cent on a like-for-like basis, which was the deepest fall seen since records began in December 2012.

On a 12-month basis the total decline was 2.2 per cent.

UK non-food retail sales decreased by 1.9 per cent on a like-for-like basis in the three months to December, and 1.4 per cent on a total basis, the lowest since March 2009.

Online sales of non-food products grew by 7.6 per cent in December, which was still below the 12-month average of eight per cent.

The online penetration rate increased from 23 per cent in December 2016 to 24.1 per cent in December 2017.

British Retail Consortium chief executive Helen Dickinson (pictured) said: “There was both light and dark in this year’s Christmas trading period. Growth in spending was in line with the, albeit modest, average for the year. However, the divergence between growth in sales of food and non-food has never been so stark.

“With inflation outpacing income growth, shoppers continued to see more of their spending power absorbed by essential items, including food, leaving less left over for buying Christmas gifts. That made this year’s festive period all the more nail-biting for non-food retailers, many of whom offered deep discounts in the last weeks before Christmas in the hope of something to celebrate at the end of a year, which has seen, on average, zero growth in non-food sales. These promotions came as a welcome relief for stretched households, although the late lift in sales came at the expense of margins for many retailers.

“Retailers who did well in such a challenging environment got both their discounting strategy and omni-channel offerings right. Those who could offer and deliver on last-minute delivery options did better, boosting online non-food sales more than 15 per cent in the seven days before Christmas – a week when, until now, shoppers would have had to turn to stores to ensure gifts made it under the tree in time.

“With spending likely to remain under severe pressure in the next few years, it’s imperative that in the forthcoming trade negotiations, the Government does all it can to avoid adding new tariffs to existing price pressures.”

Paul Martin, head of retail at KPMG, commented: “Christmas trading delivered meagre overall like-for-like growth of just 0.6 per cent in December. Online sales on the other hand rose 7.6 per cent, further reinforcing the disparity between the high street and online. While a proportion of this divide can be attributed to Cyber Monday, shoppers are increasingly preferring to shop online, especially at Christmas.

“Grocers benefited from festive feasts, but growth elsewhere on the high street was otherwise rather muted for the time of year. In contrast, all online categories grew, with health and beauty, shoes and clothes proving particularly popular. This all comes ahead of customer returns of course.

“2017 presented retailers with a cocktail of geopolitical and economic uncertainty, ongoing margin pressures and the structural changes driven by technology and changing consumer behaviour. In a market that will at best see stagnant growth in 2018, gaining market share will be a primary focus. That will entail understanding your customers fully – including where, when and how they want to shop.”